News and opinions tailored to the interests of the community of early stage investors.

Wednesday, November 28, 2012

Incentive Targeting Sold To Google, 82 Angels Cash Out

You may see lots of Scowling Scrooges
and Sourpuss Santas this season, but you’ll see Smiling Angels all around
Boston, 82 of them, who invested in Incentive Targeting, acquired by Google yesterday.

“It has been a hard-working, but a
wonderful ride” says one of our private sources. “This evening, after the
official closing, our “family” had a celebration and many of the 82 investors
joined the party. Yes, you got that right – 82! I just came back. The investors
are happy as can be -- what a better way to end a year than having a story to
share at upcoming cocktail parties about how their investment was not only
above the average, but also was bought by Google!”

Incentive Targeting, as a large 100%
angel deal, may well prove to be a milestone event both locally and nationally.
“This is great for the angel ecosystem in town: it is a shot in the arm to have
Google validate one of our smaller companies and it is liquidity for 82 angels
who will plow that money right back into local companies to fund innovation and
create jobs. Exits like this are exactly what aspiring ecosystems crave -
Boston is established, but needs these exits to stay strong,” says Christopher
Mirabile, Managing Director of Launchpad Venture Group.

The amount of angel money invested
in this company was $6.2 million, with Launchpad at $1.3 million and Hub Angels
at $600k.Angels also contributed effort
and advice. “Launchpad member Bob Gervis was on the board and was absolutely
instrumental in helping the company get the deal done and in helping them to
raise the two bridge rounds necessary to fund them through the deal,” says Mirabile.
Paul Silva of River Valley coordinated the second tranche of the A
round. Launchpad led the A2 round.

“This company raised a sizable
amount of capital over more than three years, all from angel investors.
To me, this shows the power angel investors can have by syndication and
cooperation,” says Gervis. “In addition, I believe that the fact that Incentive
Targeting raised all of its capital from angel investors facilitated the
company's ability to achieve a successful exit. The reason is that by
relying exclusively upon angel financing, the company was able to manage its
valuation during each financing round in such a way as to broaden the range of
acceptable exits. While the terms of this transaction have not been
disclosed, I believe that all parties are pleased with this outcome.”

Syndication
proves successful

For angels, this was an absolutely
massive syndication measured both by number of investors participating and by
the amount of money raised. Its origins
lie back a decade or so; back before there was either a national Angel Capital
Association or a regional angel syndication group (we call these our quarterly
New England ACA Regional Summits). James Geshwiler of the Common Angels had invited
a number of us to meet together to discuss common problems.Present were Ham Lord (Launchpad) and myself
(eCoast Angels).There were others
present, but I’ll have to refresh my memory. The ACA was formed in January,
2004 and we all became charter members.

Our first syndication meeting was in
1975. But, as we all know,it can be a long slow journey from investment
to exit. “Incentive Targeting is an early example of New England angel groups
pioneering the formation of large angel syndicates. We were the first
region in the country to really do this well and it is a credit to our strong
ecosystem and the tight, cooperative and friendly relations between all the
groups in the northeast,” says Christopher Mirabile.

Kudos
exchanged

"Launchpad is incredibly proud
to have been part of such a large and successful investor syndicate and for the
opportunity to assist Josh, Win and Ben on the board as they built this
terrific outcome. It is a credit to the angel community in the northeast as
well as its fantastic entrepreneurs that we have this to celebrate.
Congratulations to all," says Mirabile.

“We didn’t reach this milestone
alone. From day one, we have relied on the support and commitment of our
retailers, brands, investors, partners, and advisors, as well as the hard work
and dedication of our team. We could not have done this without them, and as we
look ahead, we are thrilled to be part of Google!”- Ben Sprecher,
Josh Herzig-Marx, Win Burke, and the entire Incentive Targeting team.

Tuesday Night: the deal is signed and now comes the
toast.From Left to Right are Nick
Pappas of MassVentures, Win Burke, CEO, Robert Gervis, Launchpad board rep,
David Verrill, Hub Board rep, and Ben Sprecher, one of two key founders (Josh
Herzig-Marx, the other founder, is not pictured). Photo by Christopher
Mirabile.

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About Me

George McQuilken is a founding member of the eCoast Angels Network, a group of private investors backing early-stage companies.

McQuilken was founding CEO of four companies including RSA Security. As Editor of the IBM Systems Journal, he published many of the seminal papers on software management, measurement, security, and quality. He was a project leader at IBM’s Cambridge Scientific Center working on virtual machines and networking. He is a graduate of MIT and member of the IEEE and the ACM.